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Barchart Morning Call 8/21

|Includes: ADI, GS, HPQ, INTU, LB, LOW, LZB, PCG, PETM, SJM, SPLS, TGT, TMO, Tupperware Brands Corporation (TUP), TXT, YUM
Barchart Morning Call

BC - Wed Aug 21, 6:44AM CDT


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September E-mini S&Ps (ESU13 -0.23%) this morning are down -0.32% and European stocks are down -0.40% ahead of the release of the minutes of the July 30-31 FOMC meeting. Asian stocks closed mixed: Japan +0.21%, Hong Kong -0.69%, China -0.17%, Taiwan closed because of the approach of Tropical Storm Trami, Australia +0.43%, Singapore -0.63%, South Korea -1.08%, India -1.86%. India's central bank said it will start buying government debt to pump funds into markets in an attempt to lower the surge in bond yields that threatens India's economy. Commodity prices are mostly lower. Oct crude oil (CLV13 -0.40%) is down -0.07% at a 1-week low and Oct gasoline (RBV13 +0.04%) is down -0.05%. Dec gold (GCZ13 -0.43%) is down -0.55%, and Sep copper (HGU13 -0.78%) is down -0.85%. Agricultural and livestock prices are mixed. The dollar index (DXY00 +0.20%) is up +0.27%. EUR/USD (^EURUSD) is down -0.18% and USD/JPY (^USDJPY) is up +0.16%. September T-note prices (ZNU13 -0.04%) are down -1.5 ticks.

UK Aug CBI volume of total factory orders rose to 0 from -12 in July, better than expectations of -8 and its highest level in 2 years. Aug CBI average selling prices unexpectedly fell to 0 from 2 in July, weaker than expectations of an increase to 3 and its lowest level in a year.

UK July public sector net borrowing fell -1.6 billion pounds, the first decline in 6-months, but less than expectations of -5.0 billion pounds.

In an attempt to pump funds into the markets and rein in a surge in bond yields and slow the slide in the rupee, the Reserve Bank of India (RBI) said it will buy 80 billion rupees ($1.2 billion) of government bonds through open-market operations on Aug 23 and "thereafter calibrate them both in terms of quantum and frequency" based on market conditions. The RBI also said that sales of cash-management bills will be calibrated going forward, "including scaling it down as may be necessary." The rupee weakened to a record low of 64.465 per dollar today and the yield on India's 10-year bond rose to a 12-year high of 9.48% yesterday as capital outflows intensified. Global funds have cut holdings of Indian debt by $10 billion since May 22 when Fed Chairman Bernanke first mentioned the prospects of tapering Fed stimulus.

Today's July existing home sales report is expected to show an increase of +1.4% to what would be a new 3-1/2 year high of 5.15 million, more than reversing June's -1.2% decline and taking out June's current 3-1/2 year high of 5.14 million. The markets will assess today's minutes from the July 30-31 FOMC meeting for any clues as to whether the Fed will start tapering QE3 as soon as the next FOMC meeting on Sep 17-18. There are 7 of the S&P 500 companies that report earnings today: Target (consensus $0.95), Staples (0.18), PetSmart (0.86), Lowe's (0.79), Limited Brands (0.03), JM Smucker ($1.20), Hewlett-Packard (0.86). Equity conferences during the remainder of this week include CRM Evolution Conference & Exhibition 2013 on Tue-Wed, Morgan Stanley Semiconductor & Semi-Cap Equipment Corporate Access Day on Wed, Citi One on One Midstream/Infrastructure Conference on Wed, and Raymond James Bank Conference on Thu.


Tupperware Brands (TUP +0.20%) was downgraded to "Market Perform" from "Outperform" at BMO Capital.

Target (TGT -0.42%) reported Q2 adjusted EPS of $1.19, well ahead of consensus of 96 cents.

Staples (SPLS +2.62%) reported Q2 EPS of 16 cents, lower than consensus of 18 cents, and then lowered guidance on fiscal 2013 EPS to $1.21-$1.25 from $1.30-$1.35, weaker than consensus of $1.32.

JM Smucker (SJM +0.04%) reported Q1 EPS of $1.24, stronger than consensus of $1.20.

Bloomberg repoted that PG&E (PCG +0.85%) CEO Tony Earley said that the company may be pushed to the brink of bankruptcy if California state regulators impose a proposed $2.25 billion penalty against the company related to a 2010 pipeline explosion.

Textron (TXT -0.18%) has been awarded a $640.79 million U.S. government firm-fixed-price contract for 1,300 cluster bomb units for foreign military sales to Saudi Arabia.

The WSJ reports that German Finance Minister Wolfgang Schäuble says that Greece will need a third bailout.

Lowe's (LOW +0.94%) reported Q2 EPS of 88 cents, better than consensus of 79 cents, and also announced that CEO Mark Baker will resign.

La-Z-Boy (LZB +3.96%) rose over 1% in pre-market trading after it reported Q1 EPS of 18 cents, better than consensus of 15 cents.

Analog Devices (ADI +0.15%) reported Q3 EPS of 57 cents, better than consensus of 54 cents.

Intuit (INTU -0.44%) reported Q4 adjusted EPS of 0 cents, right on expectations, although Q4 revenue of $634 million was better than consensus of $622.95 million.

The Financial Times reported that Goldman Sachs (GS +0.59%) could face up to $100 million in losses after making erroneous trades across multiple options exchanges on Tuesday.


Sep E-mini S&Ps (ESU13 -0.23%) this morning are down -5.25 points (-0.32%). The S&P 500 index on Tuesday rebounded from a 6-week low and closed mostly higher after better-than-expected quarterly earnings results from Best Buy, TJX and Urban Outfitters lifted retail stocks. Gains in stocks were limited ahead of Wednesday's release of the minutes of the July 30-31 FOMC meeting, which may shed some clarity on to when and how much the Fed may taper QE3. Closes: S&P 500 +0.38%, Dow Jones -0.05%, Nasdaq 100 +0.40%.

Sep 10-year T-notes (ZNU13 -0.04%) this morning are down -1.5 ticks. Sep 10-year T-note prices on Tuesday rebounded from Monday's 6-week low and closed higher. Short-covering and increased safe-haven demand for Treasuries boosted T-notes on concern that a Fed cut in stimulus may exacerbate capital outflows from emerging Asian markets that are already reeling after India's rupee fell to a record low and Indonesia's rupiah tumbled to a 4-year low against the dollar. Closes: TYU3 +18.0, FVU3 +9.25.

The dollar index (DXY00 +0.20%) this morning is up +0.215 (+0.27%). EUR/USD (^EURUSD) is down -0.0024 (-0.18%) and USD/JPY (^USDJPY) is up +0.16 (+0.16%). The dollar index on Tuesday slid to a 2-month low and closed lower. EUR/USD surged to a 6-1/4 month high as European investors repatriated funds from Asian markets back into euros as emerging market assets have slumped after India's rupee fell to a record low and Indonesia's rupiah tumbled to a 4-year low against the dollar. Closes: Dollar index -0.320 (-0.39%), EUR/USD +0.00827 (+0.62%), USD/JPY -0.297 (-0.30%).

Oct WTI crude oil (CLV13 -0.40%) this morning is down -7 cents (-0.07%) and Oct gasoline (RBV13 +0.04%) is down -0.0013 (-0.05%). Oct crude oil and gasoline prices on Tuesday closed mixed. Crude prices were undercut on concern a cut in Fed stimulus will reduce economic growth and demand for crude. Limiting declines were (1) the slide in the dollar index to a 2-month low and (2) expectations for weekly EIA gasoline stockpiles on Wednesday to drop -1.25 million bbl and for crude inventories to fall -1.25 million bbl to an 11-month low. Closes: CLV3 -1.75 (-1.64%), RBV3 +0.0145 (+0.51%).


US 0700 ET Weekly MBA mortgage applications, previous -4.7% with purchase sub-index -5.4% and refi sub-index -4.4%.  
    1000 ET July existing home sales expected +1.4% to 5.15 million, Jun -1.2% to 5.08 million.
    1030 ET EIA Weekly Petroleum Status Report.
    1400 ET Minutes of the July 30-31 FOMC meeting.
UK 0430 ET UK July public sector net borrowing expected -5.0 billion pounds, Jun +10.2 billion pounds.  
    0600 ET UK Aug CBI trends total orders expected -8, July -12. Aug CBI trends selling prices expected 3, July 2.
CHI 2145 ET China HSBC Aug flash manufacturing PMI expected +0.5 to 48.2, July 47.7.  


Company Name Company Ticker Time Event Description Period Estimate
Target Corp TGT US Bef-mkt Q2 2014 Earnings Release Q2 2014 0.953
Staples Inc SPLS US Bef-mkt Q2 2014 Earnings Release Q2 2014 0.181
PetSmart Inc PETM US Bef-mkt Q2 2014 Earnings Release Q2 2014 0.857
Lowe's Cos Inc LOW US 6:00 Q2 2014 Earnings Release Q2 2014 0.793
Staples Inc SPLS US 8:00 Q2 2014 Earnings Call Q2 2014  
JM Smucker Co/The SJM US 8:30 Q1 2014 Earnings Call Q1 2014  
Lowe's Cos Inc LOW US 9:00 Q2 2014 Earnings Call Q2 2014  
Yum! Brands Inc YUM US 10:00 Investor & Analyst Meeting - Yum! Restaurants International (YRI) Y 2012  
PetSmart Inc PETM US 10:00 Q2 2014 Earnings Call Q2 2014  
Target Corp TGT US 10:30 Q2 2014 Earnings Call Q2 2014  
Life Technologies Corp LIFE US 11:00 Extraordinary Shareholders Meeting - M&A Vote Y 2013  
Hewlett-Packard Co HPQ US 17:00 Q3 2013 Earnings Call Q3 2013  
L Brands Inc LTD US Aft-mkt Q2 2014 Earnings Release Q2 2014 0.595
JM Smucker Co/The SJM US   Q1 2014 Earnings Release Q1 2014 1.195
Hewlett-Packard Co HPQ US   Q3 2013 Earnings Release Q3 2013 0.864